On a frigid February evening, 2,500 party­goers descended on the Art Gallery of Ontario for First Thursdays, the museum’s monthly late-night party. This edition, celebrating a massive new exhibit devoted to the street-turned-pop artist Jean-Michel Basquiat, had sold out in under an hour. It featured panel discussions, food stalls, cheap cocktails and a performance from the hip hop DJ (and Basquiat contemporary) Grandmaster Flash. While the tipsy throng swirled in a frenzy under Frank Gehry’s spiral staircase, nightclub reps lurked outside the gallery, greeting passersby with flyers for upcoming events. “I tried to get a ticket for weeks, and this is the closest I’m going to get,” one told me. I asked if she’d ever hustled outside a museum before. “I go where the party is,” she said. “And this is the hottest party in town.”

Over the past few years, faced with dwindling audiences and shrinking government grants, museums around the world have started appealing to younger patrons, reconsidering the definition of high art in the process. In New York, the Met acquired $1 billion worth of modernist art and started incorporating “hack tours” aimed at millennials, which guide guests through the stories and artists behind the Met’s weirdest works. The Louvre offers digital tours of its vaulted treasures as a download for the handheld Nintendo 3DS system. And, closer to home, the Royal Ontario Museum has enlisted developers from U of T to help design video games that animate the exhibits. The AGO has undergone one of the most dramatic transformations—it has managed not only to survive but to thrive, shedding its reputation as a stuffy institution and emerging as a vibrant hub for interactivity, cultural discussion and pure fizzy fun.

The mastermind behind the operation is the museum’s director and CEO, Matthew Teitelbaum, a quiet 59-year-old with a manicured balding dome and an affinity for skinny ties. Teitelbaum’s relationship with the AGO began in his early 20s: he’d lead gallery tours while his father, the painter Mashel Teitelbaum, staged one-man protests outside, demanding the gallery expand its collection to include contemporary Canadian art.

The younger Teitelbaum, who took over the directorship in 1998, made his name on a $275-million renovation in 2008, which transformed the AGO from a drab grey box into a gleaming Frank Gehry–designed destination. Three years later, he found himself in a precarious position: the novelty of the reno was dying out and attendance was down 30 per cent. It was time to build a new audience. To his mind, that meant skewing young and populist. “At museums, you have to consider the invitation, the welcome and the engagement,” he says. “Most places focus so much on the engagement—what’s in the galleries—that they forget about how you’re going to get audiences there.”

In 2011, he brought in the marketing agency Endeavour (now BT/A) to promote the museum to millennials. He also devised a suite of new mobile apps: one to navigate the permanent collection, another that sends schoolkids on a museum scavenger hunt and a third that lets users customize their photos into cubist or impressionist simulacra.

The following year, Teitelbaum and his team conceived of First Thursdays, a series of monthly late-night parties with a boozy, lively atmosphere that would appeal to youthful visitors. The AGO threw its first one in October 2012, charging $12 a ticket, with performances by the indie rocker Bahamas, a talk by the sculptor Evan Penny and free life drawing classes throughout the gallery. Sensing a hit on their hands—and the possibility of wine spilled on their priceless art—several long-time patrons suggested that Teitelbaum raise prices to turn a profit, but he stayed true to his audience-driven ethos.

Over the next two years, First Thursdays became a monthly destination for big-name artists like Flash, the synth-pop trio Austra and punk legend Patti Smith—online demand for tickets to her appearance in March 2013 crashed the AGO’s reservation site. At the same time, the party became an alternative Toronto platform for emerging musicians, with performances from buzz bands like Montreal’s Majical Cloudz and Tim Hecker. A ticket to a First Thursday has become a social status marker—guests are constantly bragging about their presence on Instagram, Twitter and Vine.

The next target of Teitelbaum’s transformation was the art itself. In 2013, he got the chance to house a touring exhibition on the life of David Bowie, featuring costumes, handwritten ephemera and multimedia installations. He saw Bowie as the perfect counterpoint to age-old subjects like King Tut and Michelangelo. It took some coaxing, but Teitelbaum eventually got his skeptical board members onside by positioning Bowie himself as a work of art.

Giving a glittery rock star the great masters treatment was a huge risk—and a seminal moment in Teitelbaum’s mission. It worked: the exhibit drew 150,000 visitors and kicked off a string of wildly successful bookings targeted at inquisitive 20-somethings. They included a showcase devoted to Ai Weiwei, the Chinese pop artist and political dissident; a retrospective of Francis Bacon, the death-obsessed British expressionist; and an exhibit on Art Spiegelman, the Jewish comics artist who turned graphic novels into Pulitzer-winning literature.

These shows focused on culture that was contemporary and irreverent, art whose lasting legacy is still being hammered out—a calculated push against the conventional model of art as historical artifact. As the new audience grows up, the AGO has also created infrastructure for their kids, giving over the lower floor to a children’s gallery and the west wing to a hands-on family centre. On weekends, the place crawls with art-minded parents and their preschoolers. The results are already impressive: in 2013–14, attendance was nearly 900,000 (up from 612,000 in 2011–12) and revenues hit $74 million (up from $67 million in 2011–12).

The AGO’s youthful rebranding represents something much more than the sum of its parts: a new way of interacting with culture. In the analog age, museums were the only place to preserve and romanticize the past, lest society lose its iconic culture to war, disaster or neglect. But as we enter an era where art is routinely created, curated and maintained online, the need to embalm our history is disappearing. It’s no longer enough for museums to be passive shrines to the past. They have to be forums where culture can be discussed and debated, where a Kanye West showcase merits as much floor space as a survey of French impressionist paintings. It’s that kind of thinking that will keep the Art Gallery of Ontario partying late into the night.